Susan is a single taxpayer who is a 50% partner in a law firm. During the current tax year, the law firm has income of $200,000 that is effectively connected to the operation of the law firm. Susan has interest and dividends from her investment portfolio of $25,000. What is her Qualified Business Income (QBI) deduction for the current year?

Question

Quizplus · Accepted Answer

As a partner in a law firm, Susan's share of the partnership's income is considered qualified business income (QBI). Her QBI for the current year would be 50% of the partnership's income, which is $100,000. Her QBI deduction would therefore be 20% of $100,000, or $20,000. Her interest and dividends income do not qualify as QBI, so they are not taken into account for this deduction.

Susan Is a Single Taxpayer Who Is a 50% Partner